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Are black drivers paying more car insurance?

INVESTIGATION: Using BAME names affected premiums during an investigation; inset, Operation Black Vote’s Simon Woolley

RACE EQUALITY campaigners have issued a stark warning to the car insurance industry
after evidence emerged that drivers with black and minority ethnic (BAME) names and people living in areas with ethnically diverse communities are being charged more for car insurance than their white counterparts.

Former chair of the Equality and Human Rights Commission, Trevor Phillips, voiced his concerns after recent investigations by the BBC’s You and Yours programme and The Sun newspaper found a difference in car insurance quotes given to someone with a common British name like John and a person with a name like Mohammed.

The investigations follow a 2016 report that Phillips co- authored which found that millions of people living in areas with large BAME communities are paying an “ethnic penalty” of up to £458 a year each in higher car insurance premiums.

Phillips’ research concluded that the way insurers calculated their premiums produced “an inequality of outcome to the detriment of BAME groups”.

Speaking to The Voice, Phillips said that if the insurance industry did not face up to the issue every BAME motorist who could be at a disadvantage could have a legal claim.

He said: “Banks have now paid out something in the re- gion of £25 billion for misselling PPI (payment protection insurance). This issue won’t be at that scale but for example, if what the BBC showed is half true, then they are already facing a £1 billion payout.

“If what we showed in our 2016 report is true then that number goes up to a couple of billion pounds. What I think the insurance companies really hope is that if they keep shouting loudly enough that this is all lies, the issue will go away.

“What they don’t seem to realise is that if there is a court judgement at some point against an insurance company on this issue it won’t just be giving back money to one individual who’s been over charged....everyone who’s been discriminated against whether or not they’ve applied for motor insurance will be entitled to make a claim for discrimina- tion and they can go back up to six years.”

In the investigation by the BBC’s You and Yours programme car insurance quotes were obtained from the five leading price comparison websites, first using the name of a white British BBC producer, and secondly a different common British name, ‘Muhammad Khan.’


All five sites returned higher prices for Muhammad Khan, with the cheapest quotes increasing by between£140 and £280.

The highest price change quoted by an insurer was £360. The same test using a female name also produced some higher quotes when the surname Khan was used. The testing method was varied, quoting first Muhammad Khan, changing the IP address of the computer, and the home address used to search for the quotes. The changes meant the results varied, but in most cases showed higher prices for Muhammad Khan.

Phillips, said: “It’s not about somebody sitting in an office somewhere and saying, ‘Shall we charge people of colour more because we just don’t like them?’. The issue here is that they have constructed a framework in which computers decide on what your premiums are going to be. What we think is probably happening is that machines are learning quicker and quicker ways to make those decisions.

“And these machines have decided that names like Muhammad and other ethnic sounding names are a good shortcut, what we call a proxy, for identifying a particular type of person who is more risky. That might be to do with where they live, the type of car they drive.”

Phillips continued: “The real problem here is that the insurance companies do not know why this is happening and their sin, if I can put it this way, is that they refuse to investigate what’s going on. They are refusing to accept that there is any bias in how these premiums are calculated and they are refusing to take steps to correct it.”

According to Simon Woolley of Operation Black Vote (OBV), BAME drivers should consider taking radical steps if the industry refuses to deal with the issue. Earlier this year, OBV strongly criticised insurance company Admiral and other leading companies over what I saw as discriminatory pricing.

He told The Voice: “We had been aware for some time that people with African and Muslim names were reporting a negative experience with car insurance quotes and we wanted that to be better explained.

“There needs to be an honest debate about how algorithms are constructed and they need to be race proofed to eliminate the possibility that they are working against black and minority ethnic communities. Black people’s premiums seem very much more expensive for no other reason than their name, their religion and/ or the colour of their skin.”

Woolley continued: "Unless we can see substantially more transparency and change then it’s a task for the Equalities and Human Rights Commission. “But if that doesn’t work then I suggest that we as a community do some research, find out the worst offenders and boycott them. What other recourse do we have other than to hit them where it hurts?

However the Association of British Insurers strongly denied that the way in which insurance premiums were quoted was discriminatory. A spokesperson told The Voice: “Insurers use a wide range of factors when deciding motor premiums. This is part of what creates a competitive market that allows customers to shop around for the best deal for them.


“Use of ethnicity as one of these factors would be illegal and unacceptable, and insurers will always act within the law. We are always open to discussing serious concerns such as these with representative organisations and groups.”

Referring to the BBC investigation the spokesperson said: “Genuine insurance customers do not buy insurance by get-ting a quote and then tweaking individual details such as a name, so tests on comparison sites that operate in this way may well produce details for a customer that cannot be verified or can trigger fraud alerts.”

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